Japan manufacturing PMI hits 34-month high

Asia Mid-Session Market Update: Japan manufacturing PMI hits 34-month high; MSCI warns China may risk losing inclusion in index if it curbs outflows

US Session Highlights

- (US) President Trump to sign executive order for NAFTA renegotiation as soon as today - financial press

- (US) President Trump signs order to formally withdraw US from Trans-Pacific Partnership (TPP) trade agreement, as expected - press

- MCD recoups early losses after strong earnings report overshadows negative US SSS

- QCOM slammed on royalty suit brought by Apple

US markets on close: Dow -0.1%, S&P500 -0.3%, Nasdaq flat

- Best Sector in S&P500: Technology

- Worst Sector in S&P500: Industrials

- Biggest gainers: CSX +3.7%, CF +3.1%, WAT +2.7%, GGP +2.5%, NEM +2.4%

- Biggest losers: QCOM -12.7%, CSC -6.0%, AZO -4.0%, GPC -3.5%, DAL -3.4%

- At the close: VIX 11.8 (+0.2pts); Treasuries: 2-yr 1.16% (-6bps), 10-yr 2.40% (-6bps), 30-yr 2.99% (-6bps)

US movers afterhours

- MRCY: Reports Q2 $0.30 v $0.10e, R$98.0M v $93.0Me; Guides Q3 adj EPS $0.29-0.32 v $0.13e, R$103-107M v $96.0Me, +8.9% afterhours

- RMD: Reports Q2 $0.73 v $0.70e, R$530.4M v $522Me; +6.0% afterhours

- YHOO: Reports Q4 $0.25 v $0.22e, R$960M v $911Me; +1.1% afterhours

- OCUL: Announces $25M secondary offering of common stock (13% of market cap); -4.5% afterhours

Asia Key economic data:

- (JP) JAPAN JAN PRELIMINARY PMI MANUFACTURING: 52.8 V 52.4 PRIOR (highest since Mar 2014)

- (NZ) NEW ZEALAND DEC PERFORMANCE OF SERVICES INDEX: 58.4 V 58.1 PRIOR (13-month high)

- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 117.0 v 119.3 prior (2nd straight decline)

Asia Session Notable Observations, Speakers and Press

China:

- (CN) Head of index provider MSCI: Progress of China toward inclusion in MSCI may be halted if it cracks down on capital flows out of the country - press

- (CN) China FX Regulator SAFE: Seeking to prevent cross border capital flow risks

- (CN) Chinese securities firms said to have started preparatory work for the Shanghai-London connect program - financial press

- (CN) China's Jan new loans data may reach record high - China Securities Journal

- (TW) Taiwan seeking free trade agreement (FTA) with the US - press

Japan:

- (JP) Japan PM Abe: Do not think Abenomics polices rely on currency; Asking industry leaders to raise wages for 4th straight year

- (JP) Japan Trade Min Seko: Will continue to stress strategic and economic importance of TPP to the US

- (JP) Japan Fin Min Aso: Prepared to cooperate with Trump administration at various levels - press

Australia/New Zealand:

- (AU) NAB Residential Property Index sees 2017 Australia house price growth of +3.4% v +0.4% prior

- (AU) Australia Trade Min Ciobo: in talks on trade agreement that will not include the US after Trump withdraws the US from TPP - financial press

- (NZ) New Zealand PM English: Expect to announce election date fairly shortly - press

- (NZ) New Zealand to increase minimum wage to NZ$15.75/hr, effective April 1st

Asian Equity Indices/Futures (00:00ET)

- Nikkei -0.4%, Hang Seng +0.3%, Shanghai Composite +0.1%, ASX200 +0.7%, Kospi -0.1%

- Equity Futures: S&P500 -0.1%; Nasdaq -0.1%; Dax -0.1%; FTSE100 -0.1%

FX ranges/Commodities/Fixed Income (00:00ET)

- EUR 1.0745-1.0775; JPY 112.50-113.15; AUD 0.7570-0.7610; NZD 0.7225-0.7265

- Feb Gold flat at $1,216/oz; Feb Crude Oil +0.5% at $52.99/brl; Mar Copper flat at $2.65/lb

Asia equities/Notables/movers by sector

- Consumer discretionary: 2020.HK Anta Sports Products +2.8%

- Financials:. 3968.HK China Merchants Bank +1.4% (FY16 prelim result); 4661.JP Oriental Land Co. +0.1% (earnings speculation); 86.HK Sun Hung Kai +0.8% (profit alert)

- Industrials: BLD.AU Boral +2.9% (UBS initiates with buy); 1038.HK Cheung Kong Infrastructure -0.2% (Australia assess infrastructure risks); MacMahon +31.8% (Bid by
Cimic)

- Technology: Samsung Electronics 005930.KR +0.2% (FY16 result); LG Display 034220.KR -2.6% (Q4 result); BXB.AU Brambles +2.4% (UBS raises rating); 6502.JP Toshiba
Corporation -3.4% (restructuring)

- Materials: 297.HK Sinofert Holdings Ltd -0.8% (profit warning); SFR.AU Sandfire Resources +5.2% (Q2 result); BSL.AU BlueScope Steel +7.7% (H1 prelim result); LYC.AU
Lynas Corp +7.4% (Q2 result); SAR.AU Saracen Mineral Holdings +1.9% (Q2 result)

- Energy: IFN.AU Infigen Energy -1.8%; SEH.AU Sino Gas & Energy Holdings -2.6% (guidance); OSH.AU Oil Search -0.2% (Q4 result)

- Healthcare: RMD.AU ResMed Inc +6.9% (Q2 result)

- Utilities: DUE.AU DUET Group -1.2% (Australia assess infrastructure risks); 6506.JP Yaskawa Electric -2.8% (9-month result)

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